Analysing patterns and trends in auctions for renewable electricity

Abstract

Auctions have become the main instrument of choice to support renewable electricity around the world. This is probably due to their alleged virtues in terms of efficiency. However, whether auctions will meet their expectations and be successful will depend on the choice of design elements in particular settings. Although the analysis of the advantages and drawbacks of different design elements has received considerable attention in the literature, this is not the case with the real-world adoption of different design elements across different regions and renewable electricity technologies and overtime. The aim of this paper is to cover this gap in the literature. Using a database of 90 renewable electricity auctions from around the world, built by the authors, this article analyzes different patterns of adoption of design elements overtime, across continents and technologies. The results of the analysis show that, indeed, large differences across regions and overtime can be observed for some design elements. Regarding regional differences, this is the case for geographical diversity, local content requirements, remuneration form, auction form and disclosure of ceiling prices. Some design elements clearly show a distinct pattern over time: volume metric, size diversity, selection criteria, auction format, auction type, pricing rule and ceiling prices. In contrast, the differences across technologies are less marked and are circumscribed to geographical diversity, auction format and remuneration form. Several possible explanations for the patterns and trends in auction design are proposed.